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EXPERTS SAY THAT RECENT INCREASES in the prices of off-patent generic drugs are closely tied to the drug shortages that have plagued hospitals for years.

“They have the same root cause: a lack of competition in certain parts of the generic market,” said Gerard Anderson, professor of health policy and management, medicine, and international health at Johns Hopkins University in Baltimore.

Anderson was one of four experts who testified at the Senate Special Committee on Aging’s December 9, 2015, hearing on the cause of sudden price spikes affecting off-patent medications.

“The first indication we had of problems in the generic market were not prices; they were shortages. Hospitals were having serious problems filling prescriptions,” Anderson said. “The second manifestation we’re getting now is the higher prices for certain generic drugs.”

Anderson said that without competition, drug companies “can raise their prices several thousand percent simply overnight.”

Several companies have done just that, as exemplified by price increases for the pyrimethamine product Daraprim, which was developed in the 1950s and is used to treat Toxoplasma gondii infections.

“In 2005, a patient . . . with toxoplasmosis could expect to spend $70 on a typical course of Daraprim,” said Senator Claire McCaskill of Missouri, the committee’s ranking member.

This type of arbitrary and unpredictable inflation is not sustainable for our hospitals.

She said that in 2010, after CorePharma bought the rights to the drug, the cost of a course of treatment rose to “roughly $900.”

“In August of this year, the rights of Daraprim were once again sold, this time to Turing Phamaceuticals,” which again raised the price, McCaskill said. “An almost 1200% increase in 2010 was bad enough, but an additional 5500% price increase on a 62-year-old drug shocks the conscience.”

David W. Kimberlin, codirector of the pediatric infectious diseases division at the University of Alabama in Birmingham, said Turing’s price hike has seriously affected the ability to care for infants and immunocompromised people with serious or life-threatening toxoplasmosis.

Not only has pyrimethamine’s price risen astronomically, he said, the product is now available only through a specialty pharmacy that will not sell the drug to compounding pharmacies. Kimberlin said this has disrupted the hospital’s established relationship with the pharmacy that compounds a liquid formulation of pyrimethamine from the commercially available tablets.

Kimberlin, a past president of the Pediatric Infectious Diseases Society, said the infectious disease organization is aware of “at least 30-plus cases where people could not, in a timely fashion, get pyrimethamine” because of price or distribution network issues.

Turing, Valeant Pharmaceuticals, Retrophin, Inc., and Rodelis Therapeutics are the initial focus of the Senate committee’s investigation of companies that purchase the rights to off-patent medications and then greatly increase their price.

The tactics employed by these drug companies were universally reviled during the hearing, with speakers describing the actions as arbitrage, hostage taking, ransom, price gouging, and, in the words of committee chair Susan M. Collins of Maine, “just plain wrong.”

Collins said additional hearings will be scheduled to examine the problem and seek solutions.

Erin R. Fox, director of the drug information service for University of Utah Health Care in Salt Lake City, told committee members that the prices for nitroprusside and isoproterenol increased dramatically after the rights to the drugs were sold to Valeant in 2015.

“When we became aware of these new price increases, we calculated the potential impact to our pharmacy budget . . . if we continued to purchase the same amount of each drug,” Fox said. She said that compared with 2014, the additional cost to the health system would be “$1.6 million for isoproterenol [and] almost $300,000 for nitroprusside.”

“This type of arbitrary and unpredictable inflation is not sustainable for our hospitals, especially when we receive capitated payments for most of our patients,” Fox said.

She said hospitals handle such high prices in the same way they do drug shortages: by rationing drugs, stocking smaller quantities, and devoting “huge hours of manpower” to managing the problem.

Fox said University of Utah Health Care has not found a way to appreciably cut its use of nitroprusside.

But the health system responded to the increased price for isoproterenol by removing the medication from approximately 100 crash carts, where it had been freely available for emergencies. Now, she said, pharmacists bring the medication with them when responding to codes, which has reduced the routine use of the drug.

She said physicians strongly supported the change.

“They were very willing to work with us,” Fox said. “Our physicians were appalled. They were so frustrated to learn that these old medications that they had given forever had just skyrocketed in price.”

Fox said she’s unaware of any instances in which patients have been harmed because their physicians no longer have unfettered access to isoproterenol. But she lamented that the change in access was driven by cost instead of clinical factors.

“It is concerning when you have to make changes based on price alone,” Fox said.

Mark Merritt, president of the Pharmaceutical Care Management Association (PCMA) in Washington, D.C., said the business strategy driving the price hikes affects a relatively small number of drugs but is destabilizing reimbursement practices surrounding those medications.

“This is really a pretty new development that we’ve had to deal with rapidly,” Merritt said.

Merritt said PCMA hasn’t found a silver bullet to solve the problem. But he praised the decision of Imprimis Pharmaceuticals, a compounding pharmacy, to offer a low-cost alternative to Turing’s pyrimethamine product.

Imprimis has announced that it will, upon receipt of a prescription, provide customized formulations of pyrimethamine–leucovorin priced at “$0.99 per capsule.”

Several committee members asked the panelists whether compounding pharmacies could play a greater role in preventing price hikes affecting off-patent drugs.

Fox emphasized that compounded products are critically important for some individual patients, but she said compounding is not a “blanket, one-size-fits-all solution” to the problem of price hikes.

“Compounding is not perfect. Patients have been harmed by poorly compounded drugs,” she said.

Other potential solutions raised by the committee and panelists included speeding FDA’s review of marketing applications for older generic drugs that have no competition in the marketplace and instituting price regulations for these drugs akin to the regulations that affect public utilities.

ASHP has submitted an official statement to the committee about the issues Congress is investigating.

“We are eager to learn more about why these price spikes are occurring and to explore potential policy options and market-based solutions that may exist to minimize the likelihood of this occurring in the future,” said Kasey K. Thompson, ASHP vice president of policy, planning and communications, in a press release accompanying the statement.

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